Author Topic: 403b in-service withdrawals for Roth conversions  (Read 2126 times)


  • 5 O'Clock Shadow
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403b in-service withdrawals for Roth conversions
« on: July 26, 2014, 08:15:43 PM »
Hey everybody,

I have a Roth IRA.  I have a 403b.  I'm trying to save up to buy a house.

I have been maxing out my Roth IRA for the past few years, and on top of that I have been contributing about 15-25% of my salary to my 403b.  Needless to say, the 403b is getting more attention than the Roth IRA because of the contribution limits on IRAs.

Now that I am considering buying a house or apartment, I feel as though I should have more ready access to my savings, which are pretty much all in retirement accounts or taxable investments (yes, risky, I know, but I'm young so I'm ok with that).  After reading the IRS rules about first time homebuyers only being able to take a qualified distribution of $10,000 from their 403b/401k/IRA, I'm getting a bit concerned that I have limited my flexibility with a large sum of money stuck in my 403b.

Meanwhile, I know that my Roth IRA contributions (which have already been taxed) can be withdrawn at any time, for any reason.

Assuming I have the cash on hand, and assuming that I am in a low enough tax bracket so it is actually still a smart idea to pay my taxes now instead of later, and assuming that my contributions to Roth accounts (rolled over or not) can be accessed for any reason at any time, wouldn't it be a decent idea to do an in-service withdrawal from my 403b for a partial Roth IRA rollover?  The amount rolled over would count as a contribution, so I should be able to remove it from my account at any time (like to buy a home). 

Is this legal?  I am also saving some cash, but it would be nice to do the partial rollover and Roth conversion, as it would give me more ready access to my assets (for home buying and nothing else), and would be advantageous given my relatively low tax bracket.  Assuming my 403b provider offers this, is there anything wrong with approaching the problem this way?



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Re: 403b in-service withdrawals for Roth conversions
« Reply #1 on: July 27, 2014, 04:11:20 AM »
Rollovers are not contributions. You'd have to wait 5 years to have penalty free access to the money.

If 10,000 more in liquid savings would make you feel better about your emergency fund, make it a goal to save up that fund over the next few years.


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